The cooperation agreement for the construction of the African Renaissance Gas Pipeline in Mozambique has been completed. The completion of the agreement will lead to the construction of the estimated $6 billion, 2,600-km pipeline to transport natural gas from Mozambique’s Rovuma Basin to Gauteng in South Africa. The agreement was signed between Mozambique’s ENH, Profin Consulting Sociedade Anónima, SacOil Holdings, and the China Petroleum Pipeline Bureau (CPP).

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Over a year in the making, the agreement assures the financing commitments required for the pre-investment and engineering studies and the speedy and effective construction and implementation of the project.

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In December 2014 SacOil announced that it had entered into a Joint Development Agreement (JDA) with the Public Investment Corporation SOC Ltd (PIC) and The Instituto de Gestão das Participações do Estado (IGEPE). The JDA set out the terms for an evaluation of the technical and commercial feasibility of the construction of a gas pipeline and distribution facility intended to carry natural gas from Mozambique’s Rovuma fields to South Africa, with off-takes to other neighboring SADC countries. Over the past year ENH has replaced IGEPE in the line-up of participants in the pipeline.

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The cooperation agreement supersedes the JDA and leads to the incorporation and operation of the Joint Venture Project Development Company, which will have Chinese, Mozambican and South African consortiums of investors as shareholders.

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The South African Consortium will include SacOil and PIC. The JV Company will develop and manage all the initial activities of the Project including requisite pre-investment studies, which will be performed by CPP. CPP will pre-finance the studies up to bankable feasibility. CPP will also be the Lead Arranger and shall be responsible for procuring the debt financing equal to 70% of the total project cost from Chinese financial institutions.

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